Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) This act,
amending P.L.1979, c.16 (C.17:16G-1 et seq.), shall be known and may be cited
as the “Foreclosure Consulting and Anti-Fraud Act.”

2. Section 1 of P.L.1979,
c.16 (C.17:16G-1) is amended to read as follows:

1. As used in this act,

a. "Nonprofit social
service agency" or "nonprofit consumer credit counseling agency"
means any corporation duly organized under Title 15 of the Revised Statutes or
Title 15A of the New Jersey Statutes, no part of the assets, income or profit
of which is distributable to, or enures to the benefit of its members,
directors or officers, except to the extent permitted under this act, and which
is engaged in debt adjustment.

b. "Credit
counseling" means any guidance or educational program or advice offered by
a nonprofit social service agency or nonprofit consumer credit counseling
agency for the purpose of fostering the responsible use of credit and debt
management.

c. (1) "Debt
adjuster" means a person who either (a) acts or offers to act for a
consideration as an intermediary between a debtor and his creditors for the
purpose of paying off, settling, compounding, or [otherwise] altering the terms of
payment of any debts of the debtor, or (b) who, to that end, receives money or
other property from the debtor, or on behalf of the debtor, for payment to, or
distribution among, the creditors of the debtor.

(2) The following persons
shall not be deemed debt adjusters: (a) an attorney-at-law of this State who is
not principally engaged as a debt adjuster; (b) a person who is a regular,
full-time employee of a debtor, and who acts as an adjuster of his employer's
debts; (c) a person acting pursuant to any order or judgment of court, or
pursuant to authority conferred by any law of this State or the United States;
(d) a person who is a creditor of the debtor, or an agent of one or more
creditors of the debtor, and whose services in adjusting the debtor's debts are
rendered without cost to the debtor; [or] (e) a person who, at the
request of a debtor, arranges for or makes a loan to the debtor, and who, at
the authorization of the debtor, acts as an adjuster of the debtor's debts in
the disbursement of the proceeds of the loan, without compensation for the
services rendered in adjusting those debts ; or (f) a municipality or third
party who obtains and acts upon a municipal lien in accordance with the
procedures of the “tax sale law,” R.S.54:5-1 et seq .

(3) Subject to paragraph
(2) of this subsection c., a distressed property purchaser as defined in
subsection g. of this section and a foreclosure consultant as defined in
subsection i. of this section shall be deemed to be a debt adjuster.

d. "Debtor" means
an individual or two or more individuals who are jointly and severally, or
jointly or severally indebted.

e. “Debtor-owner” means
a debtor who is the owner of record of title to a distressed property.

f. “Distressed
property” means residential real property consisting of from one to six
dwelling units, at least one of which is occupied by a debtor-owner as a primary
residence, and which is the subject of a foreclosure or tax sale proceeding, or
which is at risk of loss due to nonpayment of taxes or whose debtor-owner is
more than 90 days delinquent on any loan that is secured by the property.

g. "Distressed
property purchaser" means a person who acquires an interest in fee or a
beneficial interest through a trust document in a distressed property while
allowing the debtor-owner to possess, occupy, or retain a leasehold interest or
any present or future interest in fee in the property, or a person who
participates in a joint venture or joint enterprise involving a distressed
property conveyance. A distressed property purchaser does not mean a federally
insured financial institution or a person who acquires distressed property
through a deed in lieu of foreclosure or a person acting in participation with
any person who acquires distressed property through a deed in lieu of
foreclosure, provided that person does not promise to convey an interest in fee
back to the debtor-owner or does not give the debtor-owner an option to
purchase the property at a later date. A distressed property purchaser also
does not mean a spouse, child, parent, or sibling of the debtor-owner.

h. "Distressed
property conveyance" means a transaction in which: a debtor-owner
transfers an interest in fee, or a beneficial interest created through a trust
document, in a distressed property; the acquirer of the property allows the
debtor-owner to occupy the property; and the acquirer of the property or a
person acting in participation with the acquirer of the property conveys or
promises to convey an interest in fee back to the debtor-owner or gives the
debtor-owner an option to purchase the property at a later date.

i. (1) "Foreclosure
consultant" means any debt adjuster who, directly or indirectly, makes any
solicitation, representation, or offer to perform, or who performs, any debt
adjustment or credit counseling that the debt adjuster represents will in any
manner do any of the following in relation to the debtor-owner’s distressed
property:

(a) prevent or postpone
the foreclosure sale or the loss of the property due to nonpayment of taxes;

(b) obtain any
forbearance from any beneficiary or mortgagee or relief with respect to a tax
sale of the property;

(c) assist the
debtor-owner in exercising any right of reinstatement or right of redemption;

(d) obtain any extension
of the period within which the debtor-owner may reinstate the debtor-owner's
rights with respect to the property;

(e) obtain any waiver of
an acceleration clause contained in any promissory note, contract, or mortgage
evidencing or securing a debt in relation to the property;

(f) assist the
debtor-owner in obtaining a loan or advance of funds to pay off the promissory
note, contract, or mortgage evidencing or securing a debt in relation to the
property; or

(g) avoid or ameliorate
the impairment of the debtor-owner's credit resulting from default on the
promissory note, contract, or mortgage, or the conduct of a foreclosure sale or
tax sale or offer to repair the debtor-owner’s credit.

(2) The following persons
shall not be deemed foreclosure consultants:

(a) a person or the
person's authorized agent acting under the express authority or written
approval of the United States Department of Housing and Urban Development;

(b) a person who holds or
is owed an obligation secured by a lien on any distressed property in
situations in which the person performs services in connection with the
obligation or lien, provided the obligation or lien did not arise as the result
of, or as part of, a proposed distressed property conveyance; and

(c) a mortgagee approved
by the United States Department of Housing and Urban Development and any
subsidiary, affiliate, agent or employee of the mortgagee, and any financial
institution, subsidiary, or affiliate, and any mortgage banker or mortgage
broker licensed pursuant to the “New Jersey Licensed Lenders Act,” P.L.1996,
c.157 (C.17:11C-1 et seq.), while engaged in the business of the mortgagee.

(cf: P.L.1986, c.184, s.1)

3. Section 2 of P.L.1979,
c.16 (C.17:16G-2) is amended to read as follows:

2. a. No person other than
a nonprofit social service agency or a nonprofit consumer credit counseling
agency shall act as a debt adjuster.

b. It shall be unlawful for
any nonprofit social service agency or nonprofit consumer credit counseling
agency to act as a debt adjuster without first obtaining a license from the
Commissioner of the Department of Banking and Insurance pursuant to this
act. The commissioner may also require any agent, officer, or employee of a
nonprofit social service agency or a nonprofit consumer credit counseling
agency providing debt adjustment or credit counseling, or category of agent,
officer, or employee, to be licensed pursuant to regulations promulgated by the
commissioner.

c. A licensee is
authorized to offer debt adjustment and credit counseling as provided
by the provisions of P.L.1979, c.16 (C.17:16G-1 et seq.).

(cf: P.L.1986, c.184, s.2)

4. Section 3 of P.L.1979,
c.16 (C.17:16G-3) is amended to read as follows:

3. a. Application
for [said]a debt adjuster
license shall be made on forms prescribed by the commissioner, who shall be
empowered to require information deemed necessary to demonstrate that the
applicant is qualified to be licensed and possesses the necessary financial
resources to sustain its operation.

b. As part of the
application process, the commissioner may, as established by regulation,
require any applicant or category of applicants to consent to a criminal
history record background check. The commissioner is authorized to exchange
fingerprint data with, and receive criminal history information from, the
Federal Bureau of Investigation, Identification Division, and the State Bureau
of Identification in the Division of State Police in performing background
checks. The commissioner is authorized to conduct additional background checks
the commissioner deems appropriate.

(cf: P.L.1986, c.184, s.3)

5. Section 4 of P.L.1979,
c.16 (C.17:16G-4) is amended to read as follows:

4. The commissioner:
shall promulgate procedures and standards for the issuance or denial of
licenses, which may include disqualifications based upon standards of good
moral character, or disqualifications based upon a criminal history record
background check performed pursuant to section 3 of P.L.1979, c.16
(C.17:16G-3), including, but not limited to, conviction of any crime involving
fraud or dishonesty; shall promulgate grounds for and procedures under
which licenses may be revoked, suspended, or reinstated [,]; and shall
establish fees necessary to meet administrative costs under this act.

(cf: P.L.1979, c.16, s.4)

6. Section 5 of P.L.1979,
c.16 (C.17:16G-5) is amended to read as follows:

5. a. Any nonprofit social
service agency or nonprofit consumer credit counseling agency licensed under
this act shall be bonded to the satisfaction of the commissioner for each
location pursuant to regulation. In setting the bonding requirements for each location,
the commissioner shall consider the number of debtors provided credit
counseling and debt adjustment services at that location, and the balance of
funds in the trust account required to be maintained by the licensee
pursuant to section 3 of P.L.2005, c.287 (C.17:16G-9).

b. The commissioner may
require a licensee to file an annual report containing that information
required by the commissioner by regulation concerning activities conducted as a
licensee in the preceding calendar year. The report may encompass all debt
adjustment or credit counseling activities of a licensee in the preceding
calendar year, or may encompass one or more particular activities, including,
but not limited to, distressed property conveyances, as specified by the
commissioner. The report shall be submitted under oath and in the form and
within the time specified by the commissioner by regulation.

c. The commissioner may
require a high cost home loan counselor to file an annual report containing
that information required by the commissioner by regulation concerning activities
conducted pursuant to subsection g. of section 5 of P.L.2003, c.64
(C.46:10B-26) as a registrant in the preceding calendar year. The report shall
be submitted under oath and in the form specified by the commissioner by
regulation.

d. Each licensee shall file
with the commissioner on or before April 1 of each year a copy of its annual
report, containing the information required by the commissioner by regulation
pursuant to P.L.1979, c.16 (C.17:16G-1 et seq.) and section 3 of P.L.2005,
c.287 (C.17:16G-9). A licensee or high cost home loan counselor that fails to
make and file its annual report in the form and within the time provided in
this section shall be subject to a penalty of not more than $100 for each day’s
failure, and the commissioner may revoke or suspend its authority to do
business in this State. The penalty may be collected in a summary proceeding
pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10
et seq.). A warrant may issue in lieu of a summons.

e. Each licensee shall
have its financial records relating to debt adjustment audited annually by a
certified public accountant or a public accountant, which audit shall be filed
with the commissioner. Such an audit shall certify that the salaries and
expenses paid by the licensee are reasonable compared to those incurred by
comparable organizations providing similar services.

f. After reviewing the
annual report and audit, the Commissioner of Banking and Insurance may cause an
examination of the licensee to be made, the actual expenses of such an
examination shall be paid by the licensee, and the commissioner may maintain
any action against any licensee to recover the fees and expenses herein
provided for.

g. The licensee shall make
a copy of the annual report and
audit available for public inspection at each of the licensee's locations.

(cf: P.L.2007, c.81, s.25)

7. Section 8 of P.L.1979,
c.16 (C.17:16G-8) is amended to read as follows:

8. Any person who violates
any provisions of this act shall be subject to a penalty of $1,000 for the
first offense and not more than $5,000 for the second and each subsequent
offense to be collected [by
and] in the name
of the commissioner in a summary proceeding under the "Penalty Enforcement
Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).

If the commissioner has reason
to believe that any person or licensee has engaged in or is engaging in any
practice or transaction prohibited by P.L.1979, c.16 (C.17:16G-1 et seq.), the
commissioner may, in addition to any remedies available, bring a summary action
in the name of and on behalf of the State against the person or licensee and
any other person concerned or in any way participating in or about to
participate in those practices or transactions, including, with respect to distressed
property conveyances, any mortgage banker, mortgage broker, or other licensee
pursuant to the “New Jersey Licensed Lenders Act,” P.L.1996, c.157 (C.17:11C-1
et seq.), any real estate broker or other licensee pursuant to R.S.45:15-1 et
seq., or any real estate appraiser licensed or certified pursuant to the
"Real Estate Appraisers Act," P.L.1991, c.68 (C.45:14F-1 et seq.),
to enjoin the person or licensee from continuing those practices or engaging in
or doing any act in furtherance of those practices or in violation of that
act. In addition to any other remedies or penalties available for a violation
of P.L.1979, c.16 (C.17:16G-1 et seq.), any debtor injured by a violation of
P.L.1979, c.16 (C.17:16G-1 et seq.) may bring a civil action for recovery of
damages, which shall include punitive damages, attorney’s fees, and costs of
suit.

The bill clarifies that under
existing law, foreclosure consultants who, directly or indirectly, solicit,
offer to perform, or perform debt adjustment or credit counseling activities
for property owners facing foreclosure with respect to such owners’ ability to
retain ownership or possession of their property, are required to be licensed
in this State as debt adjusters. The bill contains several exceptions from
this licensing requirement, including U.S. Housing and Urban Development (HUD)
Certified Housing Counseling Agencies (along with other authorized agents of
HUD), and mortgagees approved by HUD, plus any financial institutions,
subsidiaries, or affiliates, and any mortgage bankers or brokers licensed
pursuant to the “New Jersey Licensed Lenders Act,” P.L.1996, c.157 (C.17:11C-1 et
seq.), while engaged in the business of such approved mortgagees.

The bill also includes
“distressed property purchasers” as among those who must be licensed as debt
adjusters under the law. A distressed property purchaser is anyone who
acquires an interest in fee or a beneficial interest through a trust document
in a distressed property, while allowing the debtor-owner to possess, occupy,
or retain a leasehold interest or any present or future interest in fee in the
property, or anyone involved in a joint venture or enterprise involving a
distressed property conveyance.

The bill provides the
Commissioner of Banking and Insurance with additional regulatory authority to
oversee foreclosure consulting activities as well as other debt adjustment and
credit counseling activities in this State. Such regulatory authority
includes:

-permitting the commissioner
to establish licensing requirements for any agent, officer, or employee of a
debt adjuster, or any category of agent, officer, or employee, which may
include disqualifications based upon standards of good moral character; and

-permitting the commissioner,
as part of any licensing application, to require the applicant, or any category
of applicants, to consent to a criminal history record background check, and
any additional background check as deemed appropriate.

While the commissioner is
already authorized to request an annual report from any debt adjuster
concerning that adjuster’s activities conducted in the preceding calendar year,
the bill emphasizes that the commissioner may also collect information from a
debt adjuster encompassing only one or more particular activities, such as
those activities primarily performed with respect to foreclosure consulting.

The bill, concerning penalties
for violations of the applicable debt adjustment and credit counseling law,
would permit any person to bring an action for punitive damages, as well as
receive attorney’s fees and costs of suit. Additionally, the bill clarifies
the law’s penalty provisions by emphasizing that the commissioner’s existing
authority to enjoin any licensed debt adjuster and “any other person concerned
or in any way participating in” a violation, includes, with respect to
foreclosure consulting activities, any mortgage banker, mortgage broker, or
other licensee pursuant to the “New Jersey Licensed Lenders Act,” P.L.1996,
c.157 (C.17:11C-1 et seq.), any real estate broker or other licensee pursuant
to R.S.45:15-1 et seq., or any real estate appraiser licensed or certified
pursuant to the "Real Estate Appraisers Act," P.L.1991, c.68
(C.45:14F-1 et seq.).